Finance

Question: Should i pay off my debt first or try to finance a car?

(Posted by: Mark on 2010-03-11 10:10:23)

So I am having car problems, and it& #039;s a VW so parts are super expensive, so I need to get rid of it ASAP by summer. I have a EXP credit score of 623. I want to get a decent car that is not going to cause me major problems in the future. My total debt is about $4, 000, I owe close to $1, 300 towards credit cards (I have 2 open) I used to have 13 (yeah I know credit card happy) a year ago I closed 11 of them. And I owe about $2, 700 towards medical bills. I make payments on- time, never late. My question is should I pay of my credit card debt of $1, 300 within a couple of months, hoping my score goes up so I can finance a car? Or should I save that money for a down- payment, and keep making regular payments of like $100 per month towards my credit cards? I am looking to get financed for at least $16- $18k Please no sites that tell me how to manage my credit, I want advice, not a blog Easy for you to say if you have a running vehicle, I need transportation to work and get money to pay off debt, right now it& #039;s getting old bumming rides off of people...

Posted by: PooPooLaTrash on 2010-03-11, 10:14:32

Pay off your existing debt first. Otherwise, the only car loan you will get will have a high interest rate. As you pay down your debt, your credit score should rise allowing you to negotiate for a better loan. If you nudge it up into the 700s, you can probably find bank or credit union financing or even qualify for dealer preferred financing. Do not close out your older credit cards even when you pay them off. Credit history makes up 35% of your FICO score. Medical debt is not usually reported to the credit bureaus unless you are late paying per arrangements or default. And they will report you tout de suite under those conditions, so make sure you keep paying them (payoff would be ideal). Don 't incur more debt when you already have debt. -------------------- Life is rarely easy, but you do what you have to do to get by. People just don 't realize how important a good credit score is until something smacks them in the face to make the light dawn. These days, everything is higher if your credit isn 't good. Auto loan interest is higher, insurance is higher, you can 't get any kind of personal loan with reasonable interest rates, finding a job is tougher, renting an apartment is tougher (and may require a huge deposit if you 're able to find a landlord who will rent to you). If you have debt, you pay it off before incurring more debt. It 's a simple rule, tough to do, but absolutely necessary. I know a lot of people who bike or take the bus to work. Others ride mopeds or car pool with friends. You just do what you have to do.

Posted by: Victoria on 2010-03-11, 10:12:42

Pay off your debt, duh...

Posted by: NYgirl on 2010-03-11, 10:15:38

Pay off your debt 1st. Number 1 you will be too stressed all the time between car payments and all this debt. try to pay off the credit cards , see if you can reduce the medical bill fees and see if you can get your score above 650 so you can get interest free ont he car loan or a very small amount. good luck

Posted by: pintpet on 2010-03-11, 10:18:42

Pay the debt now. Its going to cost you hundreds more to slowly pay it off. If you need buy a car for less or lease for a year, pay off the debt and then start off with a clean slate

Posted by: Snowcat on 2010-03-11, 10:20:06

Closing your credit cards actually hurt your credit score because you have less available credit and are using a larger % of your remaining available credit. Keep making the payments on the medical bills. Your credit card debt isn 't that large, I would make larger than minimum payments and save for the down payment. In the time frame you have, your credit score isn 't going to change much. Avoid doing things that will lower your score, such as credit applications, etc. Talk to your banker now so you know what to expect and don 't have to go to a dealership and be dependent on whatever financing they have for you. Can you get by with a lower priced car? Just think, lower payment, shorter time making the payments, lower insurance, more money available to pay off other stuff and stay debt free and save for something else!

Posted by: Z on 2010-03-11, 10:30:31

ALWAYS PAY-OFF credit cards to finish off one problem. never again buy a car that is not made locally - so parts and labor will be always available any time and also you can contribute to your country. do not close off credit cards if you are not using them. leave them open and not use them. use only one favorite and be loyal to it. closing credit cards lower your scores. just sell your problem car anytime - why wait for summer - disclose the problem with it - and don 't expect you 'll get much money in selling it. think about the word decent - what is your personal meaning of the word. for me, decent means a local reliable car that is fun to drive but at the same time not luxurious and fast - i have a 2007 gm camaro - very happy with it - i live in US so therefore i support US product. it is a super fast sports car and can 't complain with the performance, look, speed, and mileage. GO US.